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Market Update

The Case for (and Against) Flexible Global Allocations

A flexible approach to international allocation sounds good in theory, but it doesn't always pay off in practice.

With attendees participating via live stream or optional Oculus devices, Morningstar’s recent Investment Conference was about as modern as conferences get. But in the international panel, which featured Ariel Investments’ Rupal Bhansali, Artisan Partners’ Rezo Kanovich, and Capital Group’s Rob Lovelace, a decidedly retro idea came up. When asked how much of their portfolios investors should allocate to non-U.S. stocks, the three panelists all endorsed a go-anywhere approach. Instead of setting target weightings by country or region, they argued, investors should let their global allocations drift depending on where they can find the best opportunities. 

Not coincidentally, all three panelists manage funds in exactly that spirit. In this article, I’ll go through the pros and cons of adopting this style.